World Economic Forum: New Zealand is failing to innovate

In its 2009 report on global competitiveness, the World Economic Forum identified lack of innovation as one of the key weaknesses in the New Zealand economy. Drilling down into their report, they rate New Zealand’s strengths in innovation as

• the quality of our research institutions,
• our collaboration between universities and industries,

and its weaknesses as

• lack of business spending on R&D,
• low availability of scientists and engineers,
• lack of government procurement of high-tech products and services,
• lack of patenting.

I have previously discussed the relationship between our lack of spending on R&D and our patenting: our patent data shows that these are strongly correlated. There is much more to be said about this — as the New Zealand Institute’s Rick Bowen points on in the Herald, just blindly increasing our R&D spending will not necessarily lead to improved outcomes.

Yet the power law that describes the tail of New Zealand’s patent distribution among applicants is the same as that of Australia, Finland and the United States. This suggests to me that commercialisation of science is hard where ever you are, not just in New Zealand. Perhaps it looks harder here – as a small country we have fewer successes to celebrate (although see Paul Callaghan’s book Wool to Weta).

I have also discussed the lack of scientists and engineers (despite their significant earning premiums once out of university), and this will no doubt come up again. In particular, there is a mismatch between the biotech focus of our sci-tech graduates and make up of our top 100 technology companies.

One thing I haven’t discussed yet in this blog is the role of government procurement in innovation. This has been on my mind since I read Making Silicon Valley by Christophe Lacuyer last year. I was aware of the role that Stanford University and the first modern venture capitalists played in the development of Silicon Valley, but I had not understood how important US military procurement was in nurturing it through its first 40 years. In his book, Lacuyer convincingly makes the case that Silicon Valley would not exist today without many years of patronage by the US military. Could the New Zealand government do more through procurement to build up high-tech manufacturing?